Definition of Non-Fungible Token (NFT)

What does the term "non-fungible token" mean? What is meant by a non-fungible token?

With the sudden surge in popularity of products such as "NBA Top Shot" and "CryptoPunks", there has been a great deal of talk about "non-fungible tokens" as of late, and their role in the future of industries such as collectibles and art.

This topic can become staggeringly complex, so we'll look to keep it simple.

To start, "fungible" means "able to replace or be replaced by another identical item".

So, a non-fungible item is NOT able to replace or be replaced by another identical item.

In other words, it is unique.

A non-fungible token is a cryptocurrency token that represents something unique. It is one-of-a-kind and verifies scarcity and ownership.

For instance - if you own a "NBA Top Shot" token, this is a non-fungible token.

For instance, let's say that you own a NBA Top Shot that has these attributes:

Lebron James Dunk vs Minnesota Timberwolves
Limited Edition
50 Copies of This Dunk

Let's say that you own #3 of this limited edition set.

This is a non-fungible token, as it is unique and stands on its own. NOBODY ELSE owns this particular number of this particular set - only you (until you sell it, of course).

This is a non-fungible token. It is easily proven that you own this particular token, and it is easily proven that there are only a limited quantity of this token.

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Bitcoin, on the other hand, is fungible.

For instance, there is no difference between a Bitcoin that was mined three years ago and one that was mined yesterday. It is fungible.


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